Bartolomeo v. S.B. Thomas, Inc.

• Decision Date: 17 November 1989
• Docket Number: No. 89-2339,89-2339
• Parties: Tim BARTOLOMEO, d/b/a Quality Brands, Inc., Plaintiff-Appellant, v. S.B. THOMAS, INC.; CPC International, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 530

889 F.2d 530

Tim BARTOLOMEO, d/b/a Quality Brands, Inc., Plaintiff-Appellant, v. S.B. THOMAS, INC.; CPC International, Inc., Defendants-Appellees.

No. 89-2339.

United States Court of Appeals Fourth Circuit.

Argued Oct. 5, 1989.

Decided Nov. 17, 1989.

Denise Smith Cline (Thomas W. Steed, Jr., Barry L. Creech, Moore & Van Allen, Raleigh, N.C., on brief), for plaintiff-appellant.

Robert Ambrose Wicker (Linda S. Bellows, Smith, Helms, Mulliss & Moore, Greensboro, N.C., on brief), for defendants-appellees.

Before PHILLIPS and WILKINSON, Circuit Judges, and BRITT, Chief Judge, United States District Court for the Eastern District of North Carolina (sitting by designation).

PHILLIPS, Circuit Judge:

Tim Bartolomeo appeals, pursuant to a Rule 54(b) certification, from the district court's grant of partial summary judgment disposing of three of his four claims against S.B. Thomas, Inc. (Thomas) and CPC International, Inc. (CPC). The court granted summary judgment for defendants on Bartolomeo's claims of wrongful termination of an oral distributorship agreement, unfair and deceptive trade practices in violation of N.C.Gen.Stat. Sec. 75-1.1, and tortious interference with contract, but denied summary judgment on his claim of pre-termination breaches of contract.

We affirm.

I

In October 1983, Bartolomeo entered into an oral distributorship agreement with Thomas, a subsidiary of CPC, to serve as a "multiple distributor" of Thomas' English muffins throughout North and South Carolina. Under this "two-tiered" distribution system, Thomas would contract with multiple distributors like Bartolomeo, who in turn would independently hire subdistributors to supply Thomas' English muffins within a certain region.

Bartolomeo began his multiple distributorship for Thomas on January 1, 1984. Operating under the trade name Quality Brands, he made substantial investments in equipment, office space, and promotional efforts in the course of starting up and sustaining his sole-proprietor distributorship. Over the next couple of years, Bartolomeo expanded his business by hiring his wife as an office assistant and by distributing a noncompeting product (Tastykakes), both with the blessing of Thomas.

Through it all, Bartolomeo never signed a formal written contract with Thomas. During the life of Bartolomeo's distributorship, Thomas did prepare for its distributors a form contract which provided for thirty days notice of termination and exclusivity in the distributorship. According to Thomas, existing multiple distributors, including Bartolomeo, were provided with a blank copy of that contract, but were not required to execute it because it was understood that they were already operating under the terms made express by the contract. Bartolomeo, on the other hand, claims not to recall ever having seen a copy of the form contract.

In 1986, Thomas' parent company, CPC, purchased Arnold Foods, and Thomas and Arnold Foods were grouped under Best Foods Baking Group, a division of CPC. Before that restructuring, Arnold Foods had been using a different distribution system from Thomas' and Bartolomeo thus became concerned about whether the corporate restructuring would affect his distributorship. He claims to have been given repeated assurances from regional representatives of Best Foods that his business would continue. In claimed reliance on these assurances, Bartolomeo prepared a market analysis report containing allegedly proprietary information, which he claims Thomas later used in reorganizing the region's distribution system.

In June 1987 Best Foods decided to abandon the two-tiered multiple distributorship system in favor of a single-tier system. Under the new system, Best Foods personnel would manage independent distributors, each of whom would be responsible for a single route. This reorganization required consolidating some routes in which the old Thomas and Arnold Foods distribution systems overlapped and assigning the new routes to some existing individual distributors and terminating others.

Bartolomeo was informed of this decision to reorganize the distribution system on July 21, 1987 and was told that he would be terminated "some time in 1988." On October 29, he was given formal written notice that he would be terminated effective January 2, 1988 and on that same day Best Foods offered him $65,000 for a release from liability and for permission to hire his employees. Bartolomeo asked for and was given an extension of the twenty-four hour deadline for accepting the offer, but ultimately declined it.

Bartolomeo then brought this action, alleging the four claims earlier identified, all arising out of what he claimed to be the wrongful termination of his distributorship following a series of antecedent acts on Thomas' part which constituted tortious interference with contract, violations of the state unfair trade practices law, and pre-termination breaches of contract.

The district court granted partial summary judgment, concluding that the oral distributorship agreement was one terminable at will under North Carolina law so that its termination was therefore not actionable, and that as a matter of law the defendants' conduct did not constitute unfair trade practices under the state statute nor wrongful interference with contract under state tort law. This appeal followed. On it, Bartolomeo only challenges the court's dismissal of his wrongful termination and unfair trade practices claims; the wrongful interference with contract claim is therefore not before us, and its dismissal stands.

II

In reviewing the district court's grant of summary judgment, we apply the same standard applied by the trial court and consider whether, viewing the facts in the light most favorable to Bartolomeo, there is any genuine issue of material fact precluding the entry of judgment as a matter of law. Fed.R.Civ.P. 56(c). As all agree, North Carolina substantive law controls, and that law "identif[ies] which facts are material." Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).

We take the wrongful termination and unfair trade practices claims in that order.

A.

The propriety of the court's dismissal of the wrongful termination claim turns on the proper interpretation of General Tire & Rubber Co. v. Distributors, Inc., 253 N.C. 459, 117 S.E.2d 479 (1960). In General Tire, the North Carolina Supreme Court held that while a distributorship agreement of indefinite duration is generally terminable at will, a distributor who has made substantial investments in his business is entitled to operate the distributorship for a "reasonable time." Id. 117 S.E.2d at 489. And in its discussion, the Court noted that what is a reasonable period of time depends on a variety of circumstances: amount of expenditures, length of time the distributorship has already run, potential for future profit, and past profitability; but that the ultimate test is not "whether distributor has recouped his expenditures, but whether he has had a fair opportunity." Id.

The district court read General Tire as holding by clear implication that a distributor who has recouped his expenses has, as a matter of law, been given a "reasonable time" to operate the distributorship. Because Bartolomeo indisputably had done so, he could not bring himself within General Tire 's "reasonable time" exception, and his distributorship was therefore terminable at will under the general rule. Bartolomeo challenges that reading of General Tire, contending, as we understand his argument, that the rule of General Tire mandates a factual inquiry under any and all circumstances into whether a particular distributorship had been given a "reasonable time" to operate before its termination. In support, he points to portions of the General Tire court's opinion which looked to factors such as the potential for future profit and the length of the distributorship in absolute terms.

We agree with the district court's reading. The General Tire court's references to the possibility of future profits and sheer longevity of the distributorship in that case have to be read in context. When this is done, we are satisfied that the decision does not hold, as Bartolomeo seems to argue, that even after an at-will distributor has recouped his expenses, he is entitled to continue it thereafter for a "reasonable time" as that may be determined by finders of fact on a case-by-case basis.

Unlike Bartolomeo, the distributor in General Tire had not recouped his investment and indeed had lost a considerable sum on expenditures when his distributorship was terminated. The trial court had refused to permit the jury to award any relief for the loss on the expenditures, and while the North Carolina Supreme Court found no error in this, it ordered a new trial on other grounds and discussed how the termination issue should be addressed at the new trial. Because there was evidence that the business was becoming increasingly unprofitable, the distributor had no right to recover "the expenditures ... as such," id. 117 S.E.2d at 489, but the amount of those expenditures was relevant evidence on the question of whether the distributor had had a reasonable time to operate the distributorship. There was also evidence that the parties had contemplated continuing the distributorship for at least two...